Bitcoin (BTC) slipped under the $20,000 level in Asian hours on Wednesday as a brief relief rally seemed to reverse amid recession fears in broader equity markets.
Prices dropped just over $19,900 at press time, causing a 4% loss for traders in the past 24 hours and adding to a 7% slide over the past week. The decline came as analysts at Morgan Stanley (MS) and Goldman Sachs (GS) warned on Tuesday that “recession risks were “not fully priced in.”
“The bear market will not be over until recession arrives or the risk of one is extinguished,” Morgan Stanley said in its note. Meanwhile, Goldman analysts said stock traders were pricing in a mild recession, “leaving them exposed to a further deterioration in expectations.”
Separately, Citibank (C) pegged the probability of the global economy seeing a recession in the near future at nearly 50% as central banks “tighten monetary policy and demand for goods weakens.”
Supply shocks for basic necessities could push up prices and eventually cause an economic slowdown, Citi economists said. The team now sees the world economy growing 3% this year and 2.8% in 2023, as per Bloomberg.
Since Wednesday’s open, Hong Kong’s Hang Seng index fell 2.29%, Shanghai Composite dropped 1.20%, and India’s Sensex slid 1.29%. In Europe, Germany’s DAX plunged 2.9%, while the stock index Stoxx 600 dropped 1.56%.
Premarket futures on U.S. equities fell in European morning hours. Futures on the technology-heavy Nasdaq 100 dropped 1.70%, while S&P500 lost 1.56%. Crude Oil (West Texas Intermediate) futures fell 5%.
Bitcoin has tracked broader markets closely over the past few months, meaning a further slide in broader markets could see bitcoin falling further over the coming weeks as traditional banks sound alarms on the state of the overall global economy.
Crypto market observers say a long-term recovery in bitcoin prices would take place only when global sentiment turns position and signs of expansion.
“It’s foolish to forgo the wider macro context in which crypto and finance operate,” Andrey Diyakono, chief commercial officer at Choise, said in a Telegram message earlier this week.
“Commodities market indicators and [European Union] bonds market meltdown spell out worrying predictions for the world economy.”
Diyakono added recent troubles seen at the crypto lender Celsius and prominent fund Three Arrows Capital have added to “crypto industry uncertainty,” and that the market hasn’t “hit the bottom yet.”
This story originally appeared on Coindesk